Auditors can test whether dividend payments have been made to shareholders by selecting a sample of recorded dividend payments and agreeing payee information on the cancelled check to the dividend records.

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This is a valid test that auditors can use to verify whether dividend payments have actually been made to shareholders. By selecting a sample of recorded dividend payments and cross-referencing them with cancelled checks, auditors can ensure that payee information matches the dividend records and that payments were actually made.

Auditors Can Test Whether Dividend Payments Have Been Made to Shareholders